Its Economy In Shambles, the Midwest Goes Green

It took awhile, but the U.S. Midwest finally has recognized that the industries that once powered its economy will never return. Now leaders in the region are looking to renewable energy manufacturing and technologies as key to the heartland’s renaissance.

On the same day in late June that the U.S. House of Representatives narrowly approved legislation to curb greenhouse gases and invest billions in developing wind and solar energy, Mariah Power displayed one of its distinctive vertical axis wind generating turbines at the Michigan Energy Fair in Onekama, Mich.

Four years ago, when the Great Lakes Renewable Energy Association chose this tiny Lake Michigan town to host an annual display of the latest in alternative energy technology, most residents of Manistee County thought of climate change and clean energy with the same disregard as lawmakers in Washington. Global warming, if it was a problem at all, had barely reached nuisance status. And alternative energy was seen here as little more than a novelty for tree huggers and the wealthy.

This year, however, the Michigan Energy Fair attracted 5,000 visitors over three days. And today Manistee County is home to Mariah Power, which builds its Windspire turbines in a new manufacturing plant 10 miles away that employs more than 40 people now and is expected to employ more than 100 people by the end of the year.

Mariah, which exports most of its residential-scale windmills to Europe, is the first new manufacturing facility in Manistee County in a generation. It

Mariah Power

Mariah Power, which builds the distinctive vertical axis wind turbine, will employ 100 people in Michigan by the end of the year.

also is one of the more than 30 clean energy manufacturers — spanning wind, solar, geothermal, and the energy conservation and efficiency sectors — that have established new production facilities in Michigan in the last 20 months, generating more than 3,000 new jobs.

The new Mariah plant is emblematic of the gathering momentum of the clean-energy industrial sector, particularly in the Midwest, just as the House vote represented the sector’s steadily mounting political strength. At the same time, though, the fact that Mariah just arrived this year in northern Michigan illustrates the Midwest’s late recognition of the market opportunities in building the equipment to power the nation with alternative energy.

“Michigan’s problem is America’s problem,” said Soji Adelaja, an agricultural economist and director of the Land Policy Institute at Michigan State University. “We have constructed our businesses, our mindset, and ourselves around an old concept of how the world works. But the old economy is dead. We have all the tools we need in this state to build the new economy in clean energy. The question is whether we will take this opportunity, and whether we get there before other states and other countries.”

Today, Midwestern states have decided — somewhat belatedly — that their best chance to generate prosperity in the 21st century lies in reversing the economic and environmental damage that the region’s 20th century factories caused in the first place.

No region of the United States better understands the potential wealth generated by commanding new markets — and the consequences of failing to compete when they change. The Midwest, after all, invented the production practices, made the steel, supplied the vehicles, and manufactured the parts that produced America’s energy-wasting, drive-through economy of the 20th century.

The result in Michigan, Ohio, and other Midwestern states was a way of life that for six decades consistently made it possible for men and women — with and without high school educations — to earn wages that kept new cars in the driveway, handsome boats at the marina, and comfortable second homes on lakes and rivers.

Today all of that lies in heaps of wrecked factories, bankrupt companies, and desperate neighborhoods — urban and rural — scattered across the industrial Great Lakes states. Median incomes in the region are near the lowest in the country. Michigan’s jobless rate, 14.1 percent in June, has been the nation’s highest for two straight years. Ohio has lost 500,000 jobs since 2000, more than half in manufacturing.

Probably the most important indicator of the region’s predicament is that both Ohio and Michigan lead the nation in the number of educated young people leaving — some of them to build the new clean energy economies of

Guided by the region’s governors, the Midwestern states are developing strategies that transcend politics.

other states. Colorado and Iowa have attracted large investments, foreign and domestic, to build factories to produce new solar photovoltaic and wind generating equipment. Oregon is encouraging manufacturers of new equipment to generate power from ocean waves. California’s clean energy industry, by far the nation’s largest, counts more than 10,000 businesses and 125,000 jobs, according to a report in June by the Pew Charitable Trusts.

Perhaps because things were so good for so long, it took a long time for industrial states to recognize the peril. In the past several years, however, as it became clear that millions of lost industrial and manufacturing jobs were never coming back from overseas, a new sense of urgency set in. As people in the Midwest like to say, they may be slow, but they ain’t dumb.

Largely guided by the region’s governors, Republican and Democrat alike, the Midwestern states independently developed new economic strategies that transcended politics. Between 2006 and 2008, all of the Upper Great Lakes states except Indiana approved renewable energy standards that

Michigan Land Use Institute

In Manistee, Mich., Mariah Power now builds small-scale turbines in a plant that once made parts for Chrysler and other automakers.

required utilities to generate a portion of their power from alternative sources of energy. Ohio and Michigan produced new multi-billion dollar bond programs to encourage entrepreneurs and help existing manufacturers retool, not only to produce equipment to meet the new standards but also to build clean vehicles, energy-efficient appliances, and other durable clean-energy goods. Wisconsin and Illinois focused on new research and economic development strategies to leverage their agriculture industries to produce clean biofuels. The Midwestern states also are providing support to community colleges for green-collar job training and encouraging universities to collaborate on clean energy projects.

These strategies leveraged the Midwest’s traditional competitive strengths — the greatest collection of major research universities in the world; the world’s largest freshwater resource; a strong base of high-tech manufacturing facilities; a culture of industrial innovation and entrepreneurship; and millions of people trained to make things.

The updated development strategies coincided with rising energy prices, evidence of worsening global warming, and double-digit growth in markets for wind and solar generating equipment, much of it made in Europe and Asia.

All this has prodded the Midwestern states to embrace the renewable energy economy, and a nice cross-section of those alternative technologies was on display at the Michigan Energy Fair. Wind turbines, several now manufactured in the state, turned in a steady wind blowing in off Lake

In Ohio, Toledo is the center of a new solar photovoltaic manufacturing sector that employs 6,000 people.

Michigan. Beneath baby blue skies, solar photovoltaic panels, also manufactured in Michigan, caused the needles of voltage meters to dance. People test-drove the latest in electric vehicles, including Ford’s 2010 Fusion Hybrid. Inside long wooden buildings constructed decades ago to showcase farm implements and prize heifers, entrepreneurial clean-energy companies — many formed in just the last couple of years — displayed an array of Michigan-made tools, appliances, and materials to supply the clean-energy market.

The industrial activity is reflected in state labor statistics. A study issued in May by the Michigan Department of Energy, Labor, and Economic Growth found that 109,000 residents — or 3 percent of the state workforce — are employed in clean energy industries and earn more than the average state salary of $42,000.

Other Midwestern states are experiencing similar gains in the clean energy sector. In Ohio, for instance, Toledo is the center of a new solar photovoltaic manufacturing sector that employs 6,000 people, according to the Regional Growth Partnership, Toledo’s primary economic development agency. Akron is becoming a center of fuel cell development. In Cleveland, Case Western Reserve University and Cleveland State University are anchoring new startups in wind and battery technology.

In March, Willard & Kelsey Solar Group LLC, the newest solar energy manufacturer in the Toledo region, invited Ohio Gov. Ted Strickland to tour its new plant in Perrysburg. The company plans to start annual production of 2 million solar panels, assisted by a $5 million state economic development loan and a $500,000 grant, and Strickland noted that many out-of-work auto workers will now be able to find work in these new enterprises.

In Michigan, one maker of lithium ion batteries, A123 Systems, has applied to the Department of Energy for a grant to build a $2 billion plant near Detroit that could employ 14,000 people. Hemlock Semiconductor, which manufactures polycrystalline silicon — the basic raw material for solar cell and module manufacturers — is constructing a $1 billion factory near

With federal stimulus money helping to drive a green transition, the Midwest is determined to get its share.

Midland that will employ 600 people when it opens next year. In late June, General Electric announced it would build a $100 million wind energy research and technical center in Michigan that will employ 1,100 people.

Federal economic stimulus money is helping drive this green transition. The American Recovery and Reinvestment Act appropriated approximately $100 billion for clean energy development and employment training, in hopes of creating several million new jobs. Midwestern states are determined to get their share. Almost every Democratic representative in the upper Great Lakes region voted for the House carbon cap-and-trade bill that passed in June. Two of the eight Republican lawmakers who supported the bill were from states bordering the Great Lakes.

But not everyone is convinced that the transition to a green economy will be the salvation of economically depressed Midwestern states.

“Relying on more such government handouts and mandates will inevitably raise energy prices — and high power prices are job killers,” Max Schulz, a researcher at Manhattan Institute — a free-market think tank — wrote earlier this year. “Industries that make physical products, whether cars or chemicals or paper cups, are energy-intensive and will gravitate to low-energy-cost locales. Keep in mind, too, that the traditional industries currently supplying Americans with reliable, affordable energy already employ millions of workers. A radical plan to transform our energy economy in favor of renewable energy technologies would put many of those people out of work.”

But Schulz is in the minority, as many business people and politicians believe that the transition to a green energy economy is rapidly gaining momentum.

Skip Pruss, director of the Michigan Department of Energy, Labor, and Economic Growth, said that clean energy is the only industrial sector producing new jobs in a state that since 2000 has lost 800,000 jobs, half of them in high-paying manufacturing.

His boss, Michigan Gov. Jennifer M. Granholm, set a goal in January to produce 45 percent of the state’s power from renewable sources by 2020 to accelerate the transition.

“I want those who would be resisting this change to realize that this is a job creator,” Granholm said this spring. “If you change policy the right way, you create a demand for jobs in this renewable energy and energy efficiency area. Those construction workers can be put to work building wind turbines, or building the factories for wind turbines, or installing those turbines, or attaching the turbines to a smart electric grid.”

Said Pruss, “We’re at the start of a new era of industrialization.” Germany, he point out, now generates almost 15 percent of its energy from wind, sun, geothermal, and biomass fuel sources. The German government says that next year the country will have more people working in the clean-energy sector than in auto manufacturing.

“And this is in the country,” notes Pruss, “that is home to Porsche, Volkswagen, Audi, and Mercedes.”

Keith Schneider is senior editor of Circle of Blue. A former national correspondent and regular contributor to the New York Times, he has reported for more than three decades on the environment, energy, the economy, and metropolitan policy. More about Keith Schneider →